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Facts
The Assessing Officer made an addition of Rs. 1,07,38,774/- under section 69 of the Income Tax Act, treating investment in land as unexplained, based on discrepancies between the registered sale deeds (reciting payment in 2010) and notarized possession letters (indicating payment in 2013), and the difference between actual consideration and stamp duty valuation. The Ld. CIT(A) deleted this addition, prompting the Revenue to appeal.
Held
The Income Tax Appellate Tribunal found an apparent inconsistency between the recitals in the registered sale deeds and the notarised possession letters regarding the timing and manner of cash payments for land purchase. The Tribunal held that the CIT(A)'s deletion of the addition was premature due to lack of detailed verification of documentary evidence and reconciliation of discrepancies. The matter was restored to the Assessing Officer for re-examination to verify date-wise cash payments, their sources, and reconciliation with registered instruments.
Key Issues
Whether the CIT(A) was justified in deleting the addition for unexplained investment under section 69 of the Act, given the discrepancies in payment dates and lack of documentary evidence for cash payments for land purchase.
Sections Cited
Section 69, Section 69A, Section 56(2)(x), Section 56(2)(vii), Section 143(3), Rule 27 of Income-tax Appellate Tribunal Rules, 1963, Rule 34(4) of ITAT Rule, 1963
AI-generated summary — verify with the full judgment below
ORDER PER OM PRAKASH KANT, AM
This appeal by the Revenue is directed against order dated 24.06.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – 4, Surat [in short ‘the Ld. CIT(A)’] for assessment year 2018-19, raising following grounds:
1) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of ₹1,07,38,774/- being unexplained investment as made by the AO u/s 69A of the Act despite of the fact that the Assessing Officer has made in depth investigation in the case to unearth the unexplained investment of the Assessee and has elaborated the unexplained investment of the Assessee and has elaborated the unexplained investment of the Assessee and has elaborated the same in the body of the asses the same in the body of the assessment order. 2) In addition to the ground no. 1 above, on the facts and in the 2) In addition to the ground no. 1 above, on the facts and in the 2) In addition to the ground no. 1 above, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred circumstances of the case and in law, the Ld. CIT(A) has erred circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of 1,07,38,774/ in deleting the addition of 1,07,38,774/- being unexplained being unexplained investment as made by the AO u/s 69A of the Act observ investment as made by the AO u/s 69A of the Act observ investment as made by the AO u/s 69A of the Act observing that substantial amount was declared under IDS even though that substantial amount was declared under IDS even though that substantial amount was declared under IDS even though the declaration was never related to this unexplained the declaration was never related to this unexplained the declaration was never related to this unexplained investment totaling 1,07,38,774/ investment totaling 1,07,38,774/-. 3) In addition to the ground no. 1 & 2 above, on the facts and in 3) In addition to the ground no. 1 & 2 above, on the facts and in 3) In addition to the ground no. 1 & 2 above, on the facts and in the circumstances of the case and in l the circumstances of the case and in law, the Ld. CIT(A) has aw, the Ld. CIT(A) has erred in allowing the appeal of the Assessee by correlating the erred in allowing the appeal of the Assessee by correlating the erred in allowing the appeal of the Assessee by correlating the period covered under the IDS and registered deed with the period covered under the IDS and registered deed with the period covered under the IDS and registered deed with the payment towards the impugned land in the year 2010 payment towards the impugned land in the year 2010 payment towards the impugned land in the year 2010 (installment) and in the year 2013 (as per possession letter (installment) and in the year 2013 (as per possession letter (installment) and in the year 2013 (as per possession letter) which were unrelated. which were unrelated. 4) In addition to the ground no. 1,2 & 3 above, on the facts and 4) In addition to the ground no. 1,2 & 3 above, on the facts and 4) In addition to the ground no. 1,2 & 3 above, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has in the circumstances of the case and in law, the Ld. CIT(A) has in the circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring that land title vested with the Assessee only in erred in ignoring that land title vested with the Assessee only in erred in ignoring that land title vested with the Assessee only in F.Y. 2017-18 relevant to A.Y. 2018 18 relevant to A.Y. 2018- 19 after registration and 19 after registration and prior to registration date, the Assessee acted merely as a prior to registration date, the Assessee acted merely as a prior to registration date, the Assessee acted merely as a developer/contractor on land owned by other person therefore developer/contractor on land owned by other person therefore developer/contractor on land owned by other person therefore profits disclosed in profits disclosed in profits disclosed in IDS on sale/booking of flats are IDS on sale/booking of flats IDS on sale/booking of flats are are independently earned and cannot be telescoped to the sou independently earned and cannot be telescoped to the sou independently earned and cannot be telescoped to the source of investment in land. investment in land. 5) In addition to the ground no. 1 to 4 above, on the facts and in 5) In addition to the ground no. 1 to 4 above, on the facts and in 5) In addition to the ground no. 1 to 4 above, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has the circumstances of the case and in law, the Ld. CIT(A) has the circumstances of the case and in law, the Ld. CIT(A) has erred in ignoring that land of project 'Madina Heights' was never erred in ignoring that land of project 'Madina Heights' was never erred in ignoring that land of project 'Madina Heights' was never part of Assets in books of account part of Assets in books of account of the Assessee and any of the Assessee and any payment reflected in possession letter of F.V. 2012 payment reflected in possession letter of F.V. 2012- 13 & 2013 13 & 2013- 14 were booked as land evacuation expenses by the Assessee 14 were booked as land evacuation expenses by the Assessee 14 were booked as land evacuation expenses by the Assessee only.
Briefly stated, facts of the case are that the Briefly stated, facts of the case are that the the assessee the assessee–firm filed its return of income for the year under consideration on filed its return of income for the year under consideration on filed its return of income for the year under consideration on 31.03.2019 declaring a total income of 31.03.2019 declaring a total income of ₹10,21,440/ 10,21,440/-. The return was selected for scrutiny and statutory notices under the was selected for scrutiny and statutory notices under the was selected for scrutiny and statutory notices under the Income-tax Act, 1961 (the Act) were duly issued and c tax Act, 1961 (the Act) were duly issued and c tax Act, 1961 (the Act) were duly issued and complied with.
2.1 On the basis of the Individual Transaction Statement (ITS) On the basis of the Individual Transaction Statement (ITS) On the basis of the Individual Transaction Statement (ITS) available on the departmental database, the Assessing Officer available on the departmental database, the Assessing Officer available on the departmental database, the Assessing Officer noticed that the assessee had entered into two separate purchase noticed that the assessee had entered into two separate purchase noticed that the assessee had entered into two separate purchase deeds of land, both registered during the relevant previous year. deeds of land, both registered during the relevant p deeds of land, both registered during the relevant p Being dissatisfied with the explanation offered regarding the source Being dissatisfied with the explanation offered regarding the source Being dissatisfied with the explanation offered regarding the source of investment in the said properties, the Assessing Officer treated of investment in the said properties, the Assessing Officer treated of investment in the said properties, the Assessing Officer treated the investment as unexplained and made an addition of the investment as unexplained and made an addition of the investment as unexplained and made an addition of assessment order ₹1,07,38,774/- under section 69 of the Act. In the under section 69 of the Act. In the assessment order passed under section 143(3) dated 25.09.2021, the Assessing passed under section 143(3) dated 25.09.2021, the Assessing passed under section 143(3) dated 25.09.2021, the Assessing Officer also adverted to the applicability of section 56(2)(x) of the Officer also adverted to the applicability of section 56(2)(x) of the Officer also adverted to the applicability of section 56(2)(x) of the Act, though no separate addition was made thereunder since the Act, though no separate addition was made thereunder since the Act, though no separate addition was made thereunder since the entire stamp duty value had already been broug entire stamp duty value had already been brought to tax under ht to tax under section 69.
On appeal, the learned Commissioner of Income On appeal, the learned Commissioner of Income On appeal, the learned Commissioner of Income-tax (Appeals) deleted the addition made under section 69 of the Act. However, no deleted the addition made under section 69 of the Act. However, no deleted the addition made under section 69 of the Act. However, no independent finding was recorded on the applicability of section independent finding was recorded on the applicability of section independent finding was recorded on the applicability of section 56(2)(x) of the Act. The Ld. CIT( he Ld. CIT(A) has deleted the addition observing A) has deleted the addition observing as under:
“6. In Ground No.1, 2 and 3, the appellant has challenged the 6. In Ground No.1, 2 and 3, the appellant has challenged the 6. In Ground No.1, 2 and 3, the appellant has challenged the action of the AO in making addition of Rs.1,07,38,774/ action of the AO in making addition of Rs.1,07,38,774/ action of the AO in making addition of Rs.1,07,38,774/- u/s 69 of the Act on account of unexplained investment and further, the of the Act on account of unexplained investment and further, the of the Act on account of unexplained investment and further, the appellant has also appellant has also challenged the action of the AO in invoking the challenged the action of the AO in invoking the provision of Section 56(2)(x) of the Act. Since, all these grounds provision of Section 56(2)(x) of the Act. Since, all these grounds provision of Section 56(2)(x) of the Act. Since, all these grounds are interlinked, they are being adjudicated together. According to are interlinked, they are being adjudicated together. According to are interlinked, they are being adjudicated together. According to the AO, the information in ITS revealed that the appellant has the AO, the information in ITS revealed that the appellant has the AO, the information in ITS revealed that the appellant has purchased land at Surat City Survey Ward No. 11, Nondh No. land at Surat City Survey Ward No. 11, Nondh No. land at Surat City Survey Ward No. 11, Nondh No. 2112-A & B, Mugalisara, Taluka A & B, Mugalisara, Taluka- Surat City 10(Nanpura), Dist Surat City 10(Nanpura), Dist- Surat through two separate purchase deeds registered on Surat through two separate purchase deeds registered on Surat through two separate purchase deeds registered on 13.11.2017. Each of the deeds was made for half portion of the 13.11.2017. Each of the deeds was made for half portion of the 13.11.2017. Each of the deeds was made for half portion of the above mentioned land. As p above mentioned land. As per the registered deed, purchase er the registered deed, purchase consideration for each half portion of the land is Rs.24,75,000/ consideration for each half portion of the land is Rs.24,75,000/ consideration for each half portion of the land is Rs.24,75,000/- and the stamp duty valuation of the same is Rs.53,69,387/ and the stamp duty valuation of the same is Rs.53,69,387/ and the stamp duty valuation of the same is Rs.53,69,387/-. The appellant, in its submissions, stated that the said lands were appellant, in its submissions, stated that the said lands were appellant, in its submissions, stated that the said lands were purchased in FY 2012 purchased in FY 2012-13 and 2013-14 and the payment thereof 14 and the payment thereof was also made in the respective year. The property document was also made in the respective year. The property document was also made in the respective year. The property document was executed during the year under consideration. It was also was executed during the year under consideration. It was also was executed during the year under consideration. It was also stated that the appellant is in the business of construction of land stated that the appellant is in the business of construction of land stated that the appellant is in the business of construction of land and the aforesaid lands are held as and the aforesaid lands are held as stock in trade. The appellant stock in trade. The appellant further stated that the payments towards purchase of these further stated that the payments towards purchase of these further stated that the payments towards purchase of these lands were made out of sale proceeds / booking money received lands were made out of sale proceeds / booking money received lands were made out of sale proceeds / booking money received from customers. The appellant also furnished copy of notarized from customers. The appellant also furnished copy of notarized from customers. The appellant also furnished copy of notarized possession letters for both the subject l possession letters for both the subject lands executed on ands executed on 20.03.2013 and 20.07.2013 respectively. The appellant also 20.03.2013 and 20.07.2013 respectively. The appellant also 20.03.2013 and 20.07.2013 respectively. The appellant also highlighted the fact that a Survey action in the case of appellant highlighted the fact that a Survey action in the case of appellant highlighted the fact that a Survey action in the case of appellant was conducted by the DDIT(Inv.), Surat on 30.07.2016, wherein was conducted by the DDIT(Inv.), Surat on 30.07.2016, wherein was conducted by the DDIT(Inv.), Surat on 30.07.2016, wherein books of accounts were verified and further the app books of accounts were verified and further the app books of accounts were verified and further the appellant filed declaration under IDS declaration under IDS-2016 in respect of income earned from the 2016 in respect of income earned from the said project. The AO did not accept the contention of the said project. The AO did not accept the contention of the said project. The AO did not accept the contention of the appellant and held that as per the appellant, payment towards appellant and held that as per the appellant, payment towards appellant and held that as per the appellant, payment towards the land was made in FYs 2012 the land was made in FYs 2012-13 and 2013-14, whereas, as 14, whereas, as per the registered deed, the payment was received in instalment er the registered deed, the payment was received in instalment er the registered deed, the payment was received in instalment in the year 2010. Therefore, the AO held that the claim of the in the year 2010. Therefore, the AO held that the claim of the in the year 2010. Therefore, the AO held that the claim of the appellant regarding payment is factually incorrect. The AO appellant regarding payment is factually incorrect. The AO appellant regarding payment is factually incorrect. The AO further held that the appellant failed to explain the source of cash further held that the appellant failed to explain the source of cash further held that the appellant failed to explain the source of cash used for making payment towards purchase of land. The AO ed for making payment towards purchase of land. The AO ed for making payment towards purchase of land. The AO noted that the appellant paid cash of Rs.24,75,000/ noted that the appellant paid cash of Rs.24,75,000/ noted that the appellant paid cash of Rs.24,75,000/- for each portion of land, whereas the stamp duty valuation of the land portion of land, whereas the stamp duty valuation of the land portion of land, whereas the stamp duty valuation of the land was Rs.53,63,387/ was Rs.53,63,387/- and therefore, the AO treated the amount of and therefore, the AO treated the amount of Rs.53,69,387/ Rs.53,69,387/- for each portion of land as unexplained for each portion of land as unexplained investment made by the appellant. Accordingly, the aggregate investment made by the appellant. Accordingly, the aggregate investment made by the appellant. Accordingly, the aggregate addition of Rs.1,07,38,774/ addition of Rs.1,07,38,774/- was made in the hands of the was made in the hands of the appellant. The AO further held that as per the registered deed, appellant. The AO further held that as per the registered deed, appellant. The AO further held that as per the registered deed, the consideration paid i.e. Rs.2 the consideration paid i.e. Rs.24,75,000/- is less than the stamp is less than the stamp duty valuation of Rs.53,69,387/ duty valuation of Rs.53,69,387/- and therefore, the provisions of and therefore, the provisions of section 56(2)(x) of the Act are also attracted in the case of the section 56(2)(x) of the Act are also attracted in the case of the section 56(2)(x) of the Act are also attracted in the case of the appellant. However, no separate addition was made for the appellant. However, no separate addition was made for the appellant. However, no separate addition was made for the reason that the addition of enti reason that the addition of entire stamp duty valuation of the re stamp duty valuation of the property was treated as unexplained investment u/s 69 of the property was treated as unexplained investment u/s 69 of the property was treated as unexplained investment u/s 69 of the Act. 6.1 The AR of the appellant made the following submissions: 6.1 The AR of the appellant made the following submissions: 6.1 The AR of the appellant made the following submissions: Ground No. 1
During the year the appellant had got registered 2 (TWO) 09. During the year the appellant had got registered 2 (TWO) 09. During the year the appellant had got registered 2 (TWO) documents of documents of Lands which were purchased in the year 2010 and were purchased in the year 2010 and possession and payment were possession and payment were made in 2013. The details of such made in 2013. The details of such documents are as under: documents are as under: Document Sl No Date of registration Date of registration Stamp duty Value Document Value Land Identity (Mode of Payment) (Mode of Payment) SRT/10/NPR/840 13/11/2017 13/11/2017 53,69,387 24,75,000 (CASH 24,75,000 (CASH Nondh No 2112 A 5/2017 PAID) & B, City Survey No 11 (50%) SRT/10/NPR/840 13/11/2017 13/11/2017 53,69,387 24,75,000 (CASH 24,75,000 (CASH Nondh No 2112 A 4/2017 PAID) & B, City Survey No 11 (50%) 1,07,38,774 10. The Ld Assessing Officer had made discussion at The Ld Assessing Officer had made discussion at para 6 to 9 of the Assessment Order, on how she considers the investment in of the Assessment Order, on how she considers the investment in of the Assessment Order, on how she considers the investment in the Land registered in two parts as UNEXPLAINED INVESTMENT the Land registered in two parts as UNEXPLAINED INVESTMENT the Land registered in two parts as UNEXPLAINED INVESTMENT in PROPERTY. She had disregarded the submission of the in PROPERTY. She had disregarded the submission of the in PROPERTY. She had disregarded the submission of the assessee regarding purchase of the property in earlier years i.e. assessee regarding purchase of the property in earlier years i.e. assessee regarding purchase of the property in earlier years i.e. 2010 to 2013. The recital in the documents registered as above 2010 to 2013. The recital in the documents registered as above 2010 to 2013. The recital in the documents registered as above with regard to the payments received and the possession has with regard to the payments received and the possession has with regard to the payments received and the possession has also been brushed aside by her. The Ld Assessing Officer had at also been brushed aside by her. The Ld Assessing Officer had at also been brushed aside by her. The Ld Assessing Officer had at the end of para 6 (Bold Font) of the Assessment Order stated as the end of para 6 (Bold Font) of the Assessment Order stated as the end of para 6 (Bold Font) of the Assessment Order stated as under: “That the contention of payment made in 2013 or documents “That the contention of payment made in 2013 or documents “That the contention of payment made in 2013 or documents shown by the assessee are neither duly established nor relevant. shown by the assessee are neither duly established nor relevant. shown by the assessee are neither duly established nor relevant. The claims of the assessee are contradictory, and the facts don’t The claims of the assessee are contradictory, and the facts don’t The claims of the assessee are contradictory, and the facts don’t corroborate. Therefore, the acquisition of the land has been mad corroborate. Therefore, the acquisition of the land has been mad corroborate. Therefore, the acquisition of the land has been made in instant year.” in instant year.” The above observation makes clear the assumption of the Ld The above observation makes clear the assumption of the Ld The above observation makes clear the assumption of the Ld Assessing Officer with regard to the transaction. Assessing Officer with regard to the transaction. 11. Here it is pertinent to note the various timeline of the LAND Here it is pertinent to note the various timeline of the LAND Here it is pertinent to note the various timeline of the LAND PURCHASE and THE CONSTRUCTION of “AL PURCHASE and THE CONSTRUCTION of “AL-MADINA HEIGHTS” MADINA HEIGHTS” on the said LAND and the SALES of the FLATS constructed on the aid LAND and the SALES of the FLATS constructed on the aid LAND and the SALES of the FLATS constructed on the Land so purchased. Land so purchased. a) The LAND was purchased in 2010 and the Possession and a) The LAND was purchased in 2010 and the Possession and a) The LAND was purchased in 2010 and the Possession and payment details are available as per Notarised Possession Letter payment details are available as per Notarised Possession Letter payment details are available as per Notarised Possession Letter dated 20/03/2013 and 20/07/2013. The copy of the possession dated 20/03/2013 and 20/07/2013. The copy of the possession dated 20/03/2013 and 20/07/2013. The copy of the possession cum sale agreement is enclosed herewith at Pg # 16 cum sale agreement is enclosed herewith at Pg # 16 cum sale agreement is enclosed herewith at Pg # 16-32 of PB. Also please refer to Pg # 9 [3rd para] of Assessment Order. Also please refer to Pg # 9 [3rd para] of Assessment Order. Also please refer to Pg # 9 [3rd para] of Assessment Order.
b) The TWO Registered Documents also contains the recital to the b) The TWO Registered Documents also contains the recital to the b) The TWO Registered Documents also contains the recital to the effect that the transaction had taken place somewhere in the effect that the transaction had taken place somewhere in the effect that the transaction had taken place somewhere in the year 2010. (Please refer to Pg # 33 2010. (Please refer to Pg # 33-75 of PB. The assessee firm 75 of PB. The assessee firm had constructed “AL... had constructed “AL...
MADINA HEIGHTS" residential complex on the LAND and the MADINA HEIGHTS" residential complex on the LAND and the MADINA HEIGHTS" residential complex on the LAND and the construction of 05 Towers were complete as on the date of construction of 05 Towers were complete as on the date of construction of 05 Towers were complete as on the date of SURVEY i.e. 29/07/2016 and earlier. This is evident from th SURVEY i.e. 29/07/2016 and earlier. This is evident from th SURVEY i.e. 29/07/2016 and earlier. This is evident from the declaration made under IDS declaration made under IDS-2016 vide Form 1 filed before the 2016 vide Form 1 filed before the PCIT-III, SURAT and the Final Certificate in Form 4 issued by the III, SURAT and the Final Certificate in Form 4 issued by the III, SURAT and the Final Certificate in Form 4 issued by the PCIT-III, Surat. As per the Form 1 the assessee had disclosed III, Surat. As per the Form 1 the assessee had disclosed III, Surat. As per the Form 1 the assessee had disclosed PROFIT earned on account of AL PROFIT earned on account of AL-MADINA HEIGHTS project for MADINA HEIGHTS project for the AY 2013-14,2014 14,2014-15, 2015-16 and 2016-17. The copy of the 17. The copy of the Full Set of Form No 1 to 4 is enclosed herewith as per Pg # 76 Full Set of Form No 1 to 4 is enclosed herewith as per Pg # 76 Full Set of Form No 1 to 4 is enclosed herewith as per Pg # 76- 84 of PB. Form No 4 contains the year wise details of the disclosed of PB. Form No 4 contains the year wise details of the disclosed of PB. Form No 4 contains the year wise details of the disclosed profit and it's details is available on Pg #83 of PB. profit and it's details is available on Pg #83 of PB. c) The project d c) The project development permission was taken by Bhupendra evelopment permission was taken by Bhupendra Dubal POA of Wahedbhai Choksi & Others on 22/12/2006. The Dubal POA of Wahedbhai Choksi & Others on 22/12/2006. The Dubal POA of Wahedbhai Choksi & Others on 22/12/2006. The copy of the Development permission was impounded as per Pg # copy of the Development permission was impounded as per Pg # copy of the Development permission was impounded as per Pg # 85-86 of PB. This is also impounded as per Annexure A 86 of PB. This is also impounded as per Annexure A 86 of PB. This is also impounded as per Annexure A- during survey. d) The LAND “with perm d) The LAND “with permission" was purchased from Wahed Bhai ission" was purchased from Wahed Bhai Choksi & Others in the year 2010 for which payments were Choksi & Others in the year 2010 for which payments were Choksi & Others in the year 2010 for which payments were made and possession was taken in the year 2013. made and possession was taken in the year 2013. e) Construction of 4 towers A, B, C, D & E were complete as on e) Construction of 4 towers A, B, C, D & E were complete as on e) Construction of 4 towers A, B, C, D & E were complete as on the date of SURVEY and possession of Flats had als the date of SURVEY and possession of Flats had als the date of SURVEY and possession of Flats had also been handed over. f) There was some Unauthorised construction, which was f) There was some Unauthorised construction, which was f) There was some Unauthorised construction, which was regularised by making payment of IMPACT FEE to the SURAT regularised by making payment of IMPACT FEE to the SURAT regularised by making payment of IMPACT FEE to the SURAT Municipal Corporation on 23/07/2013. Payment of impact fee Municipal Corporation on 23/07/2013. Payment of impact fee Municipal Corporation on 23/07/2013. Payment of impact fee shows that the CONSTRUCTION the LAND was complete in that shows that the CONSTRUCTION the LAND was complete in that shows that the CONSTRUCTION the LAND was complete in that period. The payment of Impact fee was made by INDIVIDUAL flat The payment of Impact fee was made by INDIVIDUAL flat The payment of Impact fee was made by INDIVIDUAL flat owners. g) During the SURVEY on 29/07/2016, statement of Shri JUNED g) During the SURVEY on 29/07/2016, statement of Shri JUNED g) During the SURVEY on 29/07/2016, statement of Shri JUNED CHANDIWALA was recorded. Question No as highlighted may CHANDIWALA was recorded. Question No as highlighted may CHANDIWALA was recorded. Question No as highlighted may kindly be referred to at Pg # 87 kindly be referred to at Pg # 87-118 of PB. The answers to the 118 of PB. The answers to the question throw question throw sufficient light on the Construction status of the sufficient light on the Construction status of the Apartments on this purchased Land as on the date of SURVEY Apartments on this purchased Land as on the date of SURVEY Apartments on this purchased Land as on the date of SURVEY i.e. 29/07/2016. i.e. 29/07/2016.
Possession of flats in AL MADINA were constructed well 12. Possession of flats in AL MADINA were constructed well 12. Possession of flats in AL MADINA were constructed well before the year 2017 is evident from the POSSESSION cum Sale before the year 2017 is evident from the POSSESSION cum Sale before the year 2017 is evident from the POSSESSION cum Sale agreement impounded as ANNEXURE A t impounded as ANNEXURE A-270, 271, 272 during the 270, 271, 272 during the survey. The copy of such agreement cum possession document is survey. The copy of such agreement cum possession document is survey. The copy of such agreement cum possession document is enclosed herewith at Pg # 119 enclosed herewith at Pg # 119-139 of PB.
From the above undisputed facts, it is apparent and clear From the above undisputed facts, it is apparent and clear From the above undisputed facts, it is apparent and clear that the LAND was purchased in 2010 and that the LAND was purchased in 2010 and possession and possession and payments were made in Feb/March payments were made in Feb/March 2013 and May/Jun 2013. 2013 and May/Jun 2013. The Ld Assessing Officer had not given adverse findings on these The Ld Assessing Officer had not given adverse findings on these The Ld Assessing Officer had not given adverse findings on these issues except observing that claims of the assessee are issues except observing that claims of the assessee are issues except observing that claims of the assessee are contradictory, and facts do not corroborate. Rather, the Ld contradictory, and facts do not corroborate. Rather, the Ld contradictory, and facts do not corroborate. Rather, the Ld Assessing Officer does not have supporting findings and sing Officer does not have supporting findings and sing Officer does not have supporting findings and necessary material to counter the facts stated and also evidence necessary material to counter the facts stated and also evidence necessary material to counter the facts stated and also evidence found during the SURVEY. found during the SURVEY.
In view of the above undisputed facts, it is submitted that 14. In view of the above undisputed facts, it is submitted that 14. In view of the above undisputed facts, it is submitted that from the above details and corroborative and other from the above details and corroborative and other circumstantial circumstantial evidence, it is undoubtably proved that the LAND was purchased evidence, it is undoubtably proved that the LAND was purchased evidence, it is undoubtably proved that the LAND was purchased way back in 2010 and the possession and payment were made way back in 2010 and the possession and payment were made way back in 2010 and the possession and payment were made in 2013, 50% in FY 2012 in 2013, 50% in FY 2012-13(FEB/MAR'2013) and remaining 50% 13(FEB/MAR'2013) and remaining 50% in FY 2013-14 (MAY/JUN 2013). Your honour would appreciate 14 (MAY/JUN 2013). Your honour would appreciate 14 (MAY/JUN 2013). Your honour would appreciate that it is but natural that where construction of apartments and at it is but natural that where construction of apartments and at it is but natural that where construction of apartments and that too "5" Towers had been built up before the legal registration that too "5" Towers had been built up before the legal registration that too "5" Towers had been built up before the legal registration of document, whether the same can be without possession and of document, whether the same can be without possession and of document, whether the same can be without possession and payment. It is sure by necessary implication that the registratio payment. It is sure by necessary implication that the registratio payment. It is sure by necessary implication that the registration was done to legalise the conveyance and transfer of the title to was done to legalise the conveyance and transfer of the title to was done to legalise the conveyance and transfer of the title to the purchaser, i.e. assessee. The payment and possession are all the purchaser, i.e. assessee. The payment and possession are all the purchaser, i.e. assessee. The payment and possession are all clear long back as mentioned in the sale clear long back as mentioned in the sale-deed and clear from the deed and clear from the possession letter. possession letter.
PAYMENT MADE IS RECORDED: The assess 15. PAYMENT MADE IS RECORDED: The assess 15. PAYMENT MADE IS RECORDED: The assessee in his submission during the course of assessment proceedings had submission during the course of assessment proceedings had submission during the course of assessment proceedings had submitted that the payment towards the LAND had been debited submitted that the payment towards the LAND had been debited submitted that the payment towards the LAND had been debited to the LAND EVACUATION EXP and accounted for in the books. to the LAND EVACUATION EXP and accounted for in the books. to the LAND EVACUATION EXP and accounted for in the books. The copy of the Ledger a/c was also submitted along with P&L The copy of the Ledger a/c was also submitted along with P&L The copy of the Ledger a/c was also submitted along with P&L a/c and Balance Sheet as 31/03/2013 and 31/03/2014. The d Balance Sheet as 31/03/2013 and 31/03/2014. The d Balance Sheet as 31/03/2013 and 31/03/2014. The copy is enclosed herewith at Pg #141 copy is enclosed herewith at Pg #141-146 of PB.
APPLICATION of Section 69: While applying the provisions of 16. APPLICATION of Section 69: While applying the provisions of 16. APPLICATION of Section 69: While applying the provisions of section 69 and for making addition under the section, the Ld section 69 and for making addition under the section, the Ld section 69 and for making addition under the section, the Ld Assessing Officer cannot act unre Assessing Officer cannot act unreasonably, and his satisfaction asonably, and his satisfaction that a particular transaction is not genuine must be based on that a particular transaction is not genuine must be based on that a particular transaction is not genuine must be based on relevant factors and on a just and reasonable enquiry. relevant factors and on a just and reasonable enquiry. relevant factors and on a just and reasonable enquiry. 17. INITAIL BURDEN DICHARGED: The assessee had submitted 17. INITAIL BURDEN DICHARGED: The assessee had submitted 17. INITAIL BURDEN DICHARGED: The assessee had submitted all the papers and more particularly the registered all the papers and more particularly the registered documents itself contain the recitals of the fact that the purchase was made itself contain the recitals of the fact that the purchase was made itself contain the recitals of the fact that the purchase was made earlier, and the registration is done now. The Ld Assessing earlier, and the registration is done now. The Ld Assessing earlier, and the registration is done now. The Ld Assessing Officer had not come out with any adverse proposition or findings Officer had not come out with any adverse proposition or findings Officer had not come out with any adverse proposition or findings to support her belief. Both the Seller and the Purch to support her belief. Both the Seller and the Purch to support her belief. Both the Seller and the Purchaser have submitted the fact of purchasing the property in earlier years. submitted the fact of purchasing the property in earlier years. submitted the fact of purchasing the property in earlier years. The Possession document cum sale agreement with payments The Possession document cum sale agreement with payments The Possession document cum sale agreement with payments details is available on record and submitted to the Ld Assessing details is available on record and submitted to the Ld Assessing details is available on record and submitted to the Ld Assessing Officer. All these are not found to be bogus or false. The d Officer. All these are not found to be bogus or false. The d Officer. All these are not found to be bogus or false. The decision in the case of SWAMINARAYAN AVENUE, The Hon'able ITAT AHD in the case of SWAMINARAYAN AVENUE, The Hon'able ITAT AHD in the case of SWAMINARAYAN AVENUE, The Hon'able ITAT AHD Bench had said that "Accordingly, the additions made by AO Bench had said that "Accordingly, the additions made by AO Bench had said that "Accordingly, the additions made by AO were merely on assumptions, conjectures and surmises without were merely on assumptions, conjectures and surmises without were merely on assumptions, conjectures and surmises without bringing any material on record with certainty and conviction that bringing any material on record with certainty and conviction that bringing any material on record with certainty and conviction that there was an unexplained investment in the land in excess of the re was an unexplained investment in the land in excess of the re was an unexplained investment in the land in excess of the price mentioned in the purchase documents and, therefore, there price mentioned in the purchase documents and, therefore, there price mentioned in the purchase documents and, therefore, there no reason to interfere with the order of the CIT(A). The copy of the no reason to interfere with the order of the CIT(A). The copy of the no reason to interfere with the order of the CIT(A). The copy of the Order is enclosed herewith at Pg # 147 Order is enclosed herewith at Pg # 147-154 of PB. Considering the above facts of the matter, the addition made u/s the above facts of the matter, the addition made u/s the above facts of the matter, the addition made u/s 69 considering the payment of Land Purchase as made during 69 considering the payment of Land Purchase as made during 69 considering the payment of Land Purchase as made during the year is erroneous and without any basis and only on the the year is erroneous and without any basis and only on the the year is erroneous and without any basis and only on the assumptions, whims, and surmises of the Ld Assessing Officer. assumptions, whims, and surmises of the Ld Assessing Officer. assumptions, whims, and surmises of the Ld Assessing Officer. The addition made the The addition made therefore may be kindly deleted. GROUND No.2 GROUND No.2 18. The Ld Assessing Officer had discussed in para 10 of the 18. The Ld Assessing Officer had discussed in para 10 of the 18. The Ld Assessing Officer had discussed in para 10 of the Assessment Order, the applicability of section 56(2)(x) of the Act. Assessment Order, the applicability of section 56(2)(x) of the Act. Assessment Order, the applicability of section 56(2)(x) of the Act. Section 56(2)(x) was inserted and made applicable from Section 56(2)(x) was inserted and made applicable from Section 56(2)(x) was inserted and made applicable from 01/04/2017. The earlier versio 01/04/2017. The earlier version of this provision was embodied n of this provision was embodied in section 56(2)(vii), which was applicable only to INDIVIDUAL in section 56(2)(vii), which was applicable only to INDIVIDUAL in section 56(2)(vii), which was applicable only to INDIVIDUAL and HUF. The new version is made applicable on persons. and HUF. The new version is made applicable on persons. and HUF. The new version is made applicable on persons.
LAND PURCHASE/POSSESSION/PAYMENT is prior to 19. LAND PURCHASE/POSSESSION/PAYMENT is prior to 19. LAND PURCHASE/POSSESSION/PAYMENT is prior to 01/04/2017: The document that is registered with the Su 01/04/2017: The document that is registered with the Su 01/04/2017: The document that is registered with the Sub Registrar Office (SRO) vide Registration S No 8404 and 8405 is Registrar Office (SRO) vide Registration S No 8404 and 8405 is Registrar Office (SRO) vide Registration S No 8404 and 8405 is enclosed herewith at Pg # 33 enclosed herewith at Pg # 33-75 of PB. According to the recitals 75 of PB. According to the recitals in the documents, it is clear that the sale agreement was in the documents, it is clear that the sale agreement was in the documents, it is clear that the sale agreement was somewhere in 2010. Later in Feb/Mar 2013 and May/Jun 2013, somewhere in 2010. Later in Feb/Mar 2013 and May/Jun 2013, somewhere in 2010. Later in Feb/Mar 2013 and May/Jun 2013, the payment is made, and the possession of the Land is obtained nt is made, and the possession of the Land is obtained nt is made, and the possession of the Land is obtained and taken vide possession documents enclosed herewith at Pg # and taken vide possession documents enclosed herewith at Pg # and taken vide possession documents enclosed herewith at Pg # 16-32 of PB. Thus the except for legal registration all the 32 of PB. Thus the except for legal registration all the 32 of PB. Thus the except for legal registration all the transactions of purchase, possession and payment is completed transactions of purchase, possession and payment is completed transactions of purchase, possession and payment is completed and finished befo and finished before June 2013. 20. ". Here SECTION 56(2)(x) 20. ". Here SECTION 56(2)(x)- RECEIVES: The Ld Assessing RECEIVES: The Ld Assessing Officer had reproduced the text of the section in the Assessment Officer had reproduced the text of the section in the Assessment Officer had reproduced the text of the section in the Assessment Order at Page No 13. The opening part of the section says "Where Order at Page No 13. The opening part of the section says "Where Order at Page No 13. The opening part of the section says "Where
any person receives.. your honour would appreciate that any person receives.. your honour would appreciate that any person receives.. your honour would appreciate that the assessee had received the Immovable Property in Feb/Mar and assessee had received the Immovable Property in Feb/Mar and assessee had received the Immovable Property in Feb/Mar and May/Jun 2013 and not on a date, on or after 01/04/2017. The May/Jun 2013 and not on a date, on or after 01/04/2017. The May/Jun 2013 and not on a date, on or after 01/04/2017. The documents are only registered on 13/11/2017 to convey the documents are only registered on 13/11/2017 to convey the documents are only registered on 13/11/2017 to convey the legal title, and the specific recital of possession is there in the legal title, and the specific recital of possession is there in the legal title, and the specific recital of possession is there in the documents. Further CONSTRUCTION of 5 TOWERS had been ents. Further CONSTRUCTION of 5 TOWERS had been ents. Further CONSTRUCTION of 5 TOWERS had been completed on the LAND, which is not possible without completed on the LAND, which is not possible without completed on the LAND, which is not possible without possession. Thus, by simply assuming without any adverse possession. Thus, by simply assuming without any adverse possession. Thus, by simply assuming without any adverse finding on records and even during the SURVEY proceedings, the finding on records and even during the SURVEY proceedings, the finding on records and even during the SURVEY proceedings, the Ld Assessing Officer had travelled Ld Assessing Officer had travelled beyond her authority. In this beyond her authority. In this matter the following judicial pronouncements on the issue of Date matter the following judicial pronouncements on the issue of Date matter the following judicial pronouncements on the issue of Date of TRANSFER are relied upon by the appellant: of TRANSFER are relied upon by the appellant:
KIRAN KASTURCHAND SHAH vs PCIT KIRAN KASTURCHAND SHAH vs PCIT 153 Taxmann.com 111 (ITAT 153 Taxmann.com 111 (ITAT-SURAT) Pg # 155-164 of PB. 164 of PB. RAJENDRA KUMAR KANTILAL PATE RAJENDRA KUMAR KANTILAL PATEL vs PCIT 150 Taxamnn.com 71 (ITAT SURAT) Pg 165 150 Taxamnn.com 71 (ITAT SURAT) Pg 165-181 of PB. 181 of PB. AZAD ZABARCHAND BHANDARI vs ACIT AZAD ZABARCHAND BHANDARI vs ACIT 35 Taxmann.com 69 (ITAT MUM) Pg # 182 35 Taxmann.com 69 (ITAT MUM) Pg # 182-188 of PB. Considering the above submission of the assessee, the alternate Considering the above submission of the assessee, the alternate Considering the above submission of the assessee, the alternate proposition of the Ld Assessing Officer is also no proposition of the Ld Assessing Officer is also not proper and t proper and justified. In view of the above submission the addition of Rs 1,07,38,774/ In view of the above submission the addition of Rs 1,07,38,774/ In view of the above submission the addition of Rs 1,07,38,774/- is not justified and the same may be kindly deleted. is not justified and the same may be kindly deleted. 6.2 I have gone through the assessment order, the submissions 6.2 I have gone through the assessment order, the submissions 6.2 I have gone through the assessment order, the submissions made by the AR of the appellant and the other materi made by the AR of the appellant and the other material available al available on record. I have also considered the case laws relied upon by on record. I have also considered the case laws relied upon by on record. I have also considered the case laws relied upon by the appellant. The AO made addition on account of unaccounted the appellant. The AO made addition on account of unaccounted the appellant. The AO made addition on account of unaccounted investment for the reason that the appellant registered 2 investment for the reason that the appellant registered 2 investment for the reason that the appellant registered 2 purchase deeds in which cash of Rs.24,75,000/ purchase deeds in which cash of Rs.24,75,000/- was paid for was paid for each parcel of land, whereas the stamp duty valuation was each parcel of land, whereas the stamp duty valuation was each parcel of land, whereas the stamp duty valuation was found to be Rs.53,63,387/ found to be Rs.53,63,387/-. The AO noted that as per the terms . The AO noted that as per the terms set out in the said registered deed, the payment for the said land set out in the said registered deed, the payment for the said land set out in the said registered deed, the payment for the said land was made in instalment in the year 2010. However, as per was made in instalment in the year 2010. However, as per was made in instalment in the year 2010. However, as per notarized possession letter submitted by the appellant, actual ossession letter submitted by the appellant, actual ossession letter submitted by the appellant, actual possession of the land and payment towards the same was possession of the land and payment towards the same was possession of the land and payment towards the same was made in FY 2012 made in FY 2012-13 and 2013-14 respectively. The AO held that 14 respectively. The AO held that there is inconsistency in the year of payment mentioned in the there is inconsistency in the year of payment mentioned in the there is inconsistency in the year of payment mentioned in the registered deed and the registered deed and the notarized possession letter and further, notarized possession letter and further, AO held that the stamp duty valuation of Rs.53,69,387/ AO held that the stamp duty valuation of Rs.53,69,387/ AO held that the stamp duty valuation of Rs.53,69,387/- for each parcel of land represents unexplained investment made by the parcel of land represents unexplained investment made by the parcel of land represents unexplained investment made by the appellant. During the Appellate Proceedings, the appellant has appellant. During the Appellate Proceedings, the appellant has appellant. During the Appellate Proceedings, the appellant has filed filed detailed detailed submission submissions s stating stating that that the the land land under under consideration was purchased from Wahedbhai Choksi in the year consideration was purchased from Wahedbhai Choksi in the year consideration was purchased from Wahedbhai Choksi in the year 2010 and the possession of the land as well as payment for the 2010 and the possession of the land as well as payment for the 2010 and the possession of the land as well as payment for the same was made in the year 2013. The appellant firm developed same was made in the year 2013. The appellant firm developed same was made in the year 2013. The appellant firm developed a residential project by the name Al Mad a residential project by the name Al Madina Heights consisting of ina Heights consisting of 5 towers. The appellant further stated the original project 5 towers. The appellant further stated the original project 5 towers. The appellant further stated the original project development permission was taken by the original owner in the development permission was taken by the original owner in the development permission was taken by the original owner in the year 2006 and further, the appellant made payment of impact year 2006 and further, the appellant made payment of impact year 2006 and further, the appellant made payment of impact fee' to SMC on 23.07.2013 to regularize some una fee' to SMC on 23.07.2013 to regularize some una fee' to SMC on 23.07.2013 to regularize some unauthorized construction in the said project. The appellant also furnished construction in the said project. The appellant also furnished construction in the said project. The appellant also furnished copy of statement recorded during the course of Survey copy of statement recorded during the course of Survey copy of statement recorded during the course of Survey proceedings conducted in its case on 29.07.2016 and also proceedings conducted in its case on 29.07.2016 and also proceedings conducted in its case on 29.07.2016 and also furnished copy of IDS declaration. furnished copy of IDS declaration. 6.3 On perusal of the assessment ord 6.3 On perusal of the assessment order, it is seen that the main er, it is seen that the main ground for addition by the AO appears to be recital in the ground for addition by the AO appears to be recital in the ground for addition by the AO appears to be recital in the purchase deed that payment for land was made in instalment in purchase deed that payment for land was made in instalment in purchase deed that payment for land was made in instalment in the year 2010, whereas as per the possession letter the payment the year 2010, whereas as per the possession letter the payment the year 2010, whereas as per the possession letter the payment was stated to have been made in the year 2 was stated to have been made in the year 2013. The fact that the 013. The fact that the land under consideration was used for development of the project land under consideration was used for development of the project land under consideration was used for development of the project 'Al Madina' is evident from the statement of Sh. Juned 'Al Madina' is evident from the statement of Sh. Juned 'Al Madina' is evident from the statement of Sh. Juned Chandiwala recorded during the Survey proceedings, in which Chandiwala recorded during the Survey proceedings, in which Chandiwala recorded during the Survey proceedings, in which there is clear mention of the fact about purchase of there is clear mention of the fact about purchase of land by the land by the appellant from Mr. Choksi in the year 2010 and also subsequent appellant from Mr. Choksi in the year 2010 and also subsequent appellant from Mr. Choksi in the year 2010 and also subsequent development of residential project thereon. The appellant claimed development of residential project thereon. The appellant claimed development of residential project thereon. The appellant claimed that the said cash was paid to the seller party in FYs 2012 that the said cash was paid to the seller party in FYs 2012 that the said cash was paid to the seller party in FYs 2012-13 and 2013-14 from the booking amount received from fl 14 from the booking amount received from fl 14 from the booking amount received from flat buyers and also furnished ledger account showing the payment towards and also furnished ledger account showing the payment towards and also furnished ledger account showing the payment towards purchase of land. The fact that the appellant has constructed 4 purchase of land. The fact that the appellant has constructed 4 purchase of land. The fact that the appellant has constructed 4 residential towers on the said land is sufficient evidence to residential towers on the said land is sufficient evidence to residential towers on the said land is sufficient evidence to support the claim of the appellant regarding possession of support the claim of the appellant regarding possession of support the claim of the appellant regarding possession of land. The appellant filed declaration under IDS in respect of the said The appellant filed declaration under IDS in respect of the said The appellant filed declaration under IDS in respect of the said project declaring undisclosed income of Rs.1,61,03,363/ project declaring undisclosed income of Rs.1,61,03,363/ project declaring undisclosed income of Rs.1,61,03,363/- for AYs from 2013-14 to 2016 14 to 2016-17 also supports the claim about purchase 17 also supports the claim about purchase of land in 2010 and construction of residential flats an of land in 2010 and construction of residential flats an of land in 2010 and construction of residential flats and subsequent payment of cash from the booking amount. It appears subsequent payment of cash from the booking amount. It appears subsequent payment of cash from the booking amount. It appears that the actual payment was made to the land owners in FY that the actual payment was made to the land owners in FY that the actual payment was made to the land owners in FY 2012-13 and 2013 13 and 2013-14 out of cash received from sale of flats. The 14 out of cash received from sale of flats. The case was selected for limited scrutiny for verification of purchase case was selected for limited scrutiny for verification of purchase case was selected for limited scrutiny for verification of purchase of immovable property reflected in ITS details. The facts stated in of immovable property reflected in ITS details. The facts stated in of immovable property reflected in ITS details. The facts stated in the registered deed clearly revealed that the land transaction the registered deed clearly revealed that the land transaction the registered deed clearly revealed that the land transaction had taken place since 2010 onwards and only issue that needed had taken place since 2010 onwards and only issue that needed had taken place since 2010 onwards and only issue that needed verification was fact about actual possession and payment of verification was fact about actual possession and payment of verification was fact about actual possession and payment of cash to the land owner. The fact about survey action in the case sh to the land owner. The fact about survey action in the case sh to the land owner. The fact about survey action in the case of the appellant and subsequent IDS declaration was available of the appellant and subsequent IDS declaration was available of the appellant and subsequent IDS declaration was available on record with the AO. It appears that the AO did not refer to any on record with the AO. It appears that the AO did not refer to any on record with the AO. It appears that the AO did not refer to any of these documents to verify the claim about purchase and of these documents to verify the claim about purchase and of these documents to verify the claim about purchase and payment of cash in the preceding years. The AO treated the t of cash in the preceding years. The AO treated the t of cash in the preceding years. The AO treated the entire stamp duty valuation of both the lands as unexplained entire stamp duty valuation of both the lands as unexplained entire stamp duty valuation of both the lands as unexplained investment without clearly appreciating the facts of the case. In investment without clearly appreciating the facts of the case. In investment without clearly appreciating the facts of the case. In my opinion, a Survey action was conducted and substantial my opinion, a Survey action was conducted and substantial my opinion, a Survey action was conducted and substantial amount was declare amount was declared under IDS in respect of the project executed d under IDS in respect of the project executed by the appellant on the land under consideration. The case was by the appellant on the land under consideration. The case was by the appellant on the land under consideration. The case was selected for scrutiny for limited purpose of verification of selected for scrutiny for limited purpose of verification of selected for scrutiny for limited purpose of verification of purchase of property and the details available with the AO in the purchase of property and the details available with the AO in the purchase of property and the details available with the AO in the form of record of s form of record of survey proceedings, facts stated in the urvey proceedings, facts stated in the registered deed and IDS declaration were sufficient to support registered deed and IDS declaration were sufficient to support registered deed and IDS declaration were sufficient to support the claim of the appellant with regard to purchase of land under the claim of the appellant with regard to purchase of land under the claim of the appellant with regard to purchase of land under consideration. Under the circumstances, the action of the AO in consideration. Under the circumstances, the action of the AO in consideration. Under the circumstances, the action of the AO in treating amount of Rs.1,0 treating amount of Rs.1,07,38,774/- as unexplained investment as unexplained investment in the hands of the appellant is not justified and accordingly, the in the hands of the appellant is not justified and accordingly, the in the hands of the appellant is not justified and accordingly, the addition made by the AO deserves to be deleted. Ground No.1, 2 addition made by the AO deserves to be deleted. Ground No.1, 2 addition made by the AO deserves to be deleted. Ground No.1, 2 and 3 are allowed and 3 are allowed.”
Aggrieved, the Revenue is in appeal before us by way of raising Aggrieved, the Revenue is in appeal before us by way of raising Aggrieved, the Revenue is in appeal before us by way of raising grounds as reproduced above. rounds as reproduced above.
Before us, the Ld. counsel for the assessee filed a Paper Book Before us, the Ld. counsel for the assessee filed a Paper Book Before us, the Ld. counsel for the assessee filed a Paper Book containing paged 1 to 144. containing paged 1 to 144.
The learned Departmental Representative submitted that The learned Departmental Representative submitted that The learned Departmental Representative submitted that although the assessee claimed that the lands were purchased in although the assessee claimed that the lands were purchased in although the assessee claimed that the lands were purchased in earlier years and that construction of residential flats had already earlier years and that construction of residential flats had already earlier years and that construction of residential flats had already been carried out thereon, the assessee failed to satisfactorily been carried out thereon, the assessee failed to satisfactorily been carried out thereon, the assessee failed to satisfactorily explain the source, manner and timing of the alleged cash in the source, manner and timing of the alleged cash in the source, manner and timing of the alleged cash payments made to the landowners. It was contended that the payments made to the landowners. It was contended that the payments made to the landowners. It was contended that the registered sale deeds recited cash payments having been made in registered sale deeds recited cash payments having been made in registered sale deeds recited cash payments having been made in the year 2010, whereas the notarised possession letters referred to the year 2010, whereas the notarised possession letters referred to the year 2010, whereas the notarised possession letters referred to payments made in the year 2013. According to the learned DR, no e in the year 2013. According to the learned DR, no e in the year 2013. According to the learned DR, no cogent documentary evidence such as contemporaneous cash books cogent documentary evidence such as contemporaneous cash books cogent documentary evidence such as contemporaneous cash books or corroborative records was produced to substantiate the or corroborative records was produced to substantiate the or corroborative records was produced to substantiate the assessee’s claim. It was therefore urged that the order of the learned assessee’s claim. It was therefore urged that the order of the learned assessee’s claim. It was therefore urged that the order of the learned CIT(A) be set aside.
6.1 Per contra, the learned counsel for the assessee supported the Per contra, the learned counsel for the assessee supported the Per contra, the learned counsel for the assessee supported the order of the learned CIT(A). It was submitted that the payments order of the learned CIT(A). It was submitted that the payments order of the learned CIT(A). It was submitted that the payments were made out of sale proceeds and booking amounts received from were made out of sale proceeds and booking amounts received from were made out of sale proceeds and booking amounts received from customers and that possession of the land had been taken much customers and that possession of the land had been customers and that possession of the land had been prior to the year of registration of the deeds. It was further prior to the year of registration of the deeds. It was further prior to the year of registration of the deeds. It was further contended that section 56(2)(x) of the Act was not applicable, as the contended that section 56(2)(x) of the Act was not applicable, as the contended that section 56(2)(x) of the Act was not applicable, as the property had been received well before the introduction of the said property had been received well before the introduction of the said property had been received well before the introduction of the said provision.
We have carefully considered t We have carefully considered the rival submissions and he rival submissions and perused the material available on record. At the outset, we note that perused the material available on record. At the outset, we note that perused the material available on record. At the outset, we note that the issue relating to section 56(2)(x) of the Act has not been the issue relating to section 56(2)(x) of the Act has not been the issue relating to section 56(2)(x) of the Act has not been adjudicated by the learned CIT(A). The assessee has also not raised adjudicated by the learned CIT(A). The assessee has also not raised adjudicated by the learned CIT(A). The assessee has also not raised any cross-objection nor invoke objection nor invoked Rule 27 of the Income d Rule 27 of the Income-tax Appellate Tribunal Rules, 1963. Consequently, the said issue does not arise Tribunal Rules, 1963. Consequently, the said issue does not arise Tribunal Rules, 1963. Consequently, the said issue does not arise for our consideration in the present appeal. for our consideration in the present appeal.
7.1 The sole issue that survives is whether the learned CIT(A) was The sole issue that survives is whether the learned CIT(A) was The sole issue that survives is whether the learned CIT(A) was justified in deleting the addition made justified in deleting the addition made under section 69 of the Act in under section 69 of the Act in respect of the alleged unexplained investment in purchase of land. respect of the alleged unexplained investment in purchase of land. respect of the alleged unexplained investment in purchase of land.
7.2 The Assessing Officer noticed that two registered sale deeds, The Assessing Officer noticed that two registered sale deeds, The Assessing Officer noticed that two registered sale deeds, each relating to half portion of the same parcel of land, were each relating to half portion of the same parcel of land, were each relating to half portion of the same parcel of land, were executed during the year unde executed during the year under consideration. In both deeds, the r consideration. In both deeds, the consideration was stated to be consideration was stated to be ₹24,75,000/- per portion, whereas per portion, whereas the stamp duty valuation was the stamp duty valuation was ₹53,69,387/- for each portion. As per for each portion. As per the recital in the registered deeds, the cash consideration was the recital in the registered deeds, the cash consideration was the recital in the registered deeds, the cash consideration was stated to have been paid stated to have been paid in instalments in the year 2010. On the in instalments in the year 2010. On the other hand, the assessee relied upon notarised possession letters other hand, the assessee relied upon notarised possession letters other hand, the assessee relied upon notarised possession letters dated 20.03.2013 and 20.07.2013, wherein cash payments were dated 20.03.2013 and 20.07.2013, wherein cash payments were dated 20.03.2013 and 20.07.2013, wherein cash payments were stated to have been made in the financial years 2012-13 and stated to have been made in the financial years 2012 stated to have been made in the financial years 2012 2013-14. In notorized possess In notorized possession letter dated 20.07.2013 executed dated 20.07.2013 executed by the seller party of second half portion of land, the assessee of second half portion of land, the assessee of second half portion of land, the assessee claimed it was purchased in financial year 2013-14, and cash claimed it was purchased in financial year 2013 claimed it was purchased in financial year 2013 payment payment of of Rs.75,000/ Rs.75,000/-, Rs.4,00,000/- Rs.10,00,000/- Rs.10,00,000/ and Rs.10,00,000/- are mentioned dated are mentioned dated 13.05.2013, 13.05.2013, 13.05.2013, 13.05.2013, 08.06.2013 and 22.06.2013 respectively for getting possession of 08.06.2013 and 22.06.2013 respectively for getting possession of 08.06.2013 and 22.06.2013 respectively for getting possession of second half portion of land in question admeasuring 244.006 sq. second half portion of land in question admeasuring 244.006 sq. second half portion of land in question admeasuring 244.006 sq. mtr.
7.3 The Assessing Officer found that the payment schedules The Assessing Officer found that the payment schedules The Assessing Officer found that the payment schedules reflected in the possession letters did reflected in the possession letters did not tally with the recitals in not tally with the recitals in the registered sale deeds and, therefore, concluded that the the registered sale deeds and, therefore, concluded that the the registered sale deeds and, therefore, concluded that the assessee had failed to satisfactorily explain the source and timing of assessee had failed to satisfactorily explain the source and timing of assessee had failed to satisfactorily explain the source and timing of the cash payments. The entire stamp duty value of both parcels was the cash payments. The entire stamp duty value of both parcels was the cash payments. The entire stamp duty value of both parcels was accordingly treated as un accordingly treated as unexplained investment of of Rs.53,69,387/- under section 69 of the Act. under section 69 of the Act.
7.4 The learned CIT(A) deleted the addition primarily on the basis The learned CIT(A) deleted the addition primarily on the basis The learned CIT(A) deleted the addition primarily on the basis that the land had been purchased in earlier years, that construction that the land had been purchased in earlier years, that construction that the land had been purchased in earlier years, that construction activity had already been carried out thereon, and that a survey had activity had already been carried out thereon, and that a survey had activity had already been carried out thereon, and that a survey had been conducted in the assessee’s case followed by disclosure under been conducted in the assessee’s case followed by discl been conducted in the assessee’s case followed by discl the Income Declaration Scheme, 2016. the Income Declaration Scheme, 2016.
7.5 After considering the submission of the parties and the order After considering the submission of the parties and the order After considering the submission of the parties and the order of the lower authorities, w of the lower authorities, we find substance in the Revenue’s e find substance in the Revenue’s grievance that there is an apparent inconsistency between the grievance that there is an apparent inconsistency between the grievance that there is an apparent inconsistency between the recitals in the registered sale deeds and the contents of the egistered sale deeds and the contents of the egistered sale deeds and the contents of the possession letters regarding the year and manner of payment. While possession letters regarding the year and manner of payment. While possession letters regarding the year and manner of payment. While the assessee has claimed that the payments were made out of the assessee has claimed that the payments were made out of the assessee has claimed that the payments were made out of booking amounts and sale proceeds, no contemporaneous cash booking amounts and sale proceeds, no contemporaneous cash booking amounts and sale proceeds, no contemporaneous cash book, ledger entries duly book, ledger entries duly corroborated with supporting vouchers, or corroborated with supporting vouchers, or other primary evidence demonstrating the flow of cash on the stated other primary evidence demonstrating the flow of cash on the stated other primary evidence demonstrating the flow of cash on the stated dates has been brought on record before the Assessing Officer or dates has been brought on record before the Assessing Officer or dates has been brought on record before the Assessing Officer or examined by the learned CIT(A). examined by the learned CIT(A). However, on a careful reading of However, on a careful reading of the appellate order, it is evident that the deletion has been made rder, it is evident that the deletion has been made rder, it is evident that the deletion has been made largely on the basis of the assessee’s assertions and surrounding largely on the basis of the assessee’s assertions and surrounding largely on the basis of the assessee’s assertions and surrounding circumstances, circumstances, circumstances, without without without a a a detailed detailed detailed verification verification verification of of of primary primary primary documentary evidence evidencing the date documentary evidence evidencing the date-wise cash payments and wise cash payments and the availability of cash on the relevant dates. of cash on the relevant dates.
7.6 In matters falling under section 69 of the Act, the initial onus In matters falling under section 69 of the Act, the initial onus In matters falling under section 69 of the Act, the initial onus lies squarely on the assessee to satisfactorily explain the nature and lies squarely on the assessee to satisfactorily explain the nature and lies squarely on the assessee to satisfactorily explain the nature and source of the investment with credible and verifiable evidence. Mere source of the investment with credible and verifiable evidence. Mere source of the investment with credible and verifiable evidence. Mere assertions, howsoever plausible, cannot substitute such proof. wsoever plausible, cannot substitute such proof. wsoever plausible, cannot substitute such proof. Equally, where material discrepancies are noticed in the documents Equally, where material discrepancies are noticed in the documents Equally, where material discrepancies are noticed in the documents relied upon by the assessee, the same require proper verification relied upon by the assessee, the same require proper verification relied upon by the assessee, the same require proper verification and reconciliation.
7.7 In view of the foregoing discussion, we are of the In view of the foregoing discussion, we are of the In view of the foregoing discussion, we are of the considered opinion that the deletion of the addition by the learned CIT(A) is opinion that the deletion of the addition by the learned CIT(A) is opinion that the deletion of the addition by the learned CIT(A) is premature, inasmuch as the material discrepancy between the premature, inasmuch as the material discrepancy between the premature, inasmuch as the material discrepancy between the recitals in the registered sale deeds and the notarised possession recitals in the registered sale deeds and the notarised possession recitals in the registered sale deeds and the notarised possession letters regarding the timing and manner of cash payments has not letters regarding the timing and manner of cash pa letters regarding the timing and manner of cash pa been reconciled on the basis of primary documentary evidence. been reconciled on the basis of primary documentary evidence. been reconciled on the basis of primary documentary evidence. While the assessee has asserted that the payments were made out While the assessee has asserted that the payments were made out While the assessee has asserted that the payments were made out of booking advances and sale proceeds, such assertion has not been of booking advances and sale proceeds, such assertion has not been of booking advances and sale proceeds, such assertion has not been substantiated by contemporaneous records such as cash books, substantiated by contemporaneous records such as substantiated by contemporaneous records such as ledger accounts duly supported by vouchers, or other cogent ledger accounts duly supported by vouchers, or other cogent ledger accounts duly supported by vouchers, or other cogent evidence demonstrating availability and utilisation of cash on the evidence demonstrating availability and utilisation of cash on the evidence demonstrating availability and utilisation of cash on the relevant dates.
7.8 At the same time, having regard to the fact that the issue At the same time, having regard to the fact that the issue At the same time, having regard to the fact that the issue turns entirely on verification of fac turns entirely on verification of factual material and not on any tual material and not on any settled question of law, we deem it appropriate, in the interest of settled question of law, we deem it appropriate, in the interest of settled question of law, we deem it appropriate, in the interest of justice, to restore the matter to the file of the Assessing Officer for a justice, to restore the matter to the file of the Assessing Officer for a justice, to restore the matter to the file of the Assessing Officer for a limited and focused re limited and focused re-examination. The Assessing Officer shall . The Assessing Officer shall afford the assessee afford the assessee one effective opportunity to place on record to place on record documentary evidence establishing (i) the date documentary evidence establishing (i) the date-wise cash payments wise cash payments towards purchase of the land, (ii) the corresponding source of such towards purchase of the land, (ii) the corresponding source of such towards purchase of the land, (ii) the corresponding source of such payments as reflected in the books of account, and (iii) payments as reflected in the books of account, and (iii) payments as reflected in the books of account, and (iii) reconciliation of the reconciliation of the same with the recitals in the registered same with the recitals in the registered instruments.
7.9 The Assessing Officer shall confine the enquiry strictly to the The Assessing Officer shall confine the enquiry strictly to the The Assessing Officer shall confine the enquiry strictly to the above aspects and shall decide the issue afresh in accordance with above aspects and shall decide the issue afresh in accordance with above aspects and shall decide the issue afresh in accordance with law, by passing a reasoned order after granting due opportunity of law, by passing a reasoned order after granting due opportunity of law, by passing a reasoned order after granting due opportunity of being heard to the assessee. We clarify that no opinion is expressed being heard to the assessee. We clarify that no opinion is expressed being heard to the assessee. We clarify that no opinion is expressed on the merits of the addition, which shall be examined on the merits of the addition, which shall be examined on the merits of the addition, which shall be examined independently by the Assessing Officer on the basis of evidence independently by the Assessing Officer on the basis of evidence independently by the Assessing Officer on the basis of evidence brought on record.
7.10 Accordingly, the order of the learned CIT(A Accordingly, the order of the learned CIT(A) on this issue is set ) on this issue is set aside and the matter is restored to the file of the Assessing Officer. aside and the matter is restored to the file of the Assessing Officer. aside and the matter is restored to the file of the Assessing Officer. The grounds raised by the Revenue are allowed for statistical The grounds raised by the Revenue are allowed for statistical The grounds raised by the Revenue are allowed for statistical purposes.
In the result, the appeal of the Revenue is allowed In the result, the appeal of the Revenue is allowed In the result, the appeal of the Revenue is allowed for statistical purposes.
Order pronounced under Rule 34(4) of ITAT Rule, 1963 on onounced under Rule 34(4) of ITAT Rule, 1963 on onounced under Rule 34(4) of ITAT Rule, 1963 on 23/12/2025.